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Jon Corzine, former governor of New Jersey, former U.S. senator, was subpoenaed yesterday to testify on Capitol Hill. It was Corzine's first public appearance since he resigned as CEO of MF Global, a brokerage firm which declared bankruptcy in October. An estimated $1.2 billion of client funds is missing from MF Global.
NPR's Yuki Noguchi reports Corzine apologized repeatedly, but denied knowingly breaking any rules.
YUKI NOGUCHI, BYLINE: At the time it filed for bankruptcy, MF Global had some 36,000 customers who held commodity futures trading accounts with the firm. As problems mounted, many customers tried to pull their money out of those accounts. The problem was that a lot of the money was missing. Corzine, looking at times emotional, had no explanation.
JON CORZINE: I was stunned when I was told on Sunday, October 30, 2011, that MF Global could not account for many hundreds of millions of dollars of client money.
NOGUCHI: Corzine said he was sorry. He acknowledged the firm took a huge stake in European sovereign debt at his suggestion. When that investment soured, it shattered faith in the firm, and things quickly came crashing down.
But in answering questions from the House Agriculture Committee, Corzine - once the revered CEO of Goldman Sachs - often sounded unsure of himself. He repeatedly cited a lack of access to documents as a reason he could not give definitive answers to even basic questions. Here, he faced Republican Bob Goodlatte of Virginia.
REP. BOB GOODLATTE: And are you aware of any instances prior to the events immediately preceding the bankruptcy, in which there were shortfalls in consumer funds?
CORZINE: I am not aware of any shortfall that had been presented to me.
GOODLATTE: Prior to learning that on Sunday, October 30th?
CORZINE: I don't have any recollection of - yes.
GOODLATTE: And is it possible that any such shortfalls could have gone undetected by you or other senior management?
CORZINE: Apparent - I don't - I'm not being flip; apparently, there...
NOGUCHI: Goodlatte pressed him on this key point: Was the client money used to cover a bad bet? Corzine replied: In the last few hours, there were a lot of transactions, and it might have been a miscalculation. Goodlatte shot back.
GOODLATTE: It would be a rather large miscalculation, wouldn't it? We're missing $1.2 billion.
CORZINE: I agree.
NOGUCHI: Many committee members fingered the regulator, the Commodity Futures Trading Commission, for failing to see the shortfall in accounts. They also pointed to the friendship between the chairman of that commission, Gary Gensler, and Corzine, who worked together at Goldman. But Corzine denied he tried to lean on that relationship, or any other connections in Washington, in the company's final days.
CORZINE: Corzine also said he never knowingly committed any wrongdoing. Without documents, he could only say he never intended to authorize the use of client funds. At the same time, he couldn't say who had access to those accounts, or how client accounts might have been accessed without his knowledge. Corzine declined invitations from committee members to put up his personal fortune to restore client accounts.
NOGUCHI: Illinois Republican Timothy Johnson.
REP. TIMOTHY JOHNSON: A lot of individuals all over the country, and the people they represent, are going to wind up holding the bag because of what is either negligence and-or co-mingling and-or abnegation of your responsibility as a fiduciary in that capacity.
NOGUCHI: MF Global had tried to sell itself in the 11th hour. That deal fell through because of the missing money.
Yuki Noguchi, NPR News, Washington.
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